2026-11-10 21:02:21
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DoorDash just agreed to acquire Instacart for $17 billion, one of the biggest bets yet on the future of online grocery.
But Instacart is more than a grocery delivery app. Nearly 30% of its revenue comes from advertising and other services, and its technology powers online shopping for retailers beyond its own marketplace.
For DoorDash, the appeal goes well beyond adding grocery orders. The combination could bring together its massive delivery network with Instacart’s retailer relationships, advertising platform, and commerce software.
The strategic logic makes sense. But with a 26% acquisition premium, substantial cash financing, and Deliveroo still being integrated, is DoorDash paying a reasonable price for its next growth engine?
Today at a glance:
DoorDash’s growth engine
Inside Instacart
The strategic fit
The synergy playbook
The $17 billion question
Beyond delivery
We screened for small companies with the ingredients to compound for years:
🔬 Small size: Market cap below $3 billion.
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📈 Consistent growth: EPS growth above 11% annually.
🛡️ Financial discipline: Manageable debt and no share dilution.
The result? Our free 64-stock Hidden Compounders Watchlist, explaining what each company does in plain English and why it made the list.
DoorDash entered the Instacart deal from a position of strength. Q3 revenue grew 34% Y/Y to $4.6 billion, while adjusted EBITDA surged 41% and crossed $1 billion quarterly for the first time.
Total orders grew 28% to 993 million.
Marketplace Gross Order Value (GOV) increased 36% to $33.9 billion.
Deliveroo contributed to that growth, but the underlying business remained strong. Excluding the acquisition, orders rose 17%, while GOV and revenue grew 23%, matching Q2’s organic growth.
The momentum extends beyond restaurant delivery:
US restaurants: GOV growth accelerated slightly despite tough comparisons, supported by stronger customer acquisition and continued DashPass adoption.
Grocery and retail: GOV grew more than twice as fast as restaurants, with improving order frequency and broader merchant selection.
International: Wolt and Deliveroo continued expanding, with profitability exceeding management’s expectations.
Importantly, DoorDash is becoming more profitable as it scales. Contribution profit margin improved to 5.2% of GOV, up from 5.0% in Q2, while quarterly free cash flow reached $787 million.
DoorDash already has the consumer base, delivery network, and growing grocery demand. The Instacart acquisition adds capabilities beyond its existing marketplace.
So what exactly is DoorDash getting for $17 billion?
Instacart enters the deal with solid momentum.
Q3 Gross Transaction Value (GTV) grew 15% Y/Y to $10.5 billion, supported by 91.4 million orders (+10%).
Revenue increased 17% to $1.1 billion, representing 10.4% of GTV.
The business generates revenue from two main sources:
Transaction: Revenue grew 14% to $764 million, primarily from fees paid by retailers and customers for grocery orders and fulfillment.
Advertising & Other: Revenue surged 23% to $331 million, as consumer brands paid for sponsored placements and retailers used Instacart’s technology services.
Advertising & Other now accounts for 30% of revenue and 3.1% of GTV (+21 basis points Y/Y), underscoring its growing importance to Instacart’s economics. Instacart generated a 72% gross margin, although down two points Y/Y, and $174 million in operating profit at a 16% margin. Free cash flow reached $307 million.
But Instacart’s reach extends well beyond its own app. The company works with more than 2,200 retail banners representing nearly 100,000 stores, providing e-commerce storefronts, fulfillment technology, in-store tools, and advertising capabilities.
A grocery order can therefore run through Instacart’s technology even when the customer shops directly on a retailer’s website.
That’s an important distinction. DoorDash is acquiring both Instacart's customer delivery volume and its software and deep relationships with grocery retailers.
2026-11-07 23:02:40
Welcome to the Saturday PRO edition of How They Make Money.
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📊 Monthly reports: 200+ companies visualized.
📩 Tuesday articles: Exclusive deep dives and insights.
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📩 Saturday PRO reports: Timely insights on the latest earnings.
Today at a glance:
📱Apple: Memory Squeeze
🛍️ Shopify: Expectations Bite
📈 AppLovin: The Model Payoff
🌐 Arista: AI Networking Supercycle
🦾 Arm: The $2B CPU Ramp
📲 Qualcomm: Data Center Arrives
🎮 Sony: The IP Flywheel
💉 Pfizer: The Replacement Race
🧬 Amgen: Oncology Breakthrough
🇩🇰 Novo Nordisk: The Pill Pulls Ahead
🏝️ Booking: Travel Slows Again
🏨 Marriott: Travel Reaccelerates
🛖 Airbnb: Growth Reignites
✈️ Expedia: Q4 Air Pocket
☁️ Cloudflare: Higher Gear
🐶 Datadog: Guidance Gap
🤝 MercadoLibre: The Cost of Frequency
🥡 DoorDash: Grocery Endgame
🏎️ Ferrari: Luce Sells Out
☁️ Atlassian: Guidance Disconnect
🔲 Block: The Flywheel Connects
🔌 Astera Labs: Scorpio Takes Over
🍟 McDonald’s: Value Gets a Do-Over
🌮 Yum! Brands: Taco Bell’s Comeback
🎤 Live Nation: 180 Million Fans in Sight
⚡️ Axon: The Drone Timing Trap
💳 Fiserv: Finding a Floor
🇰🇷 Coupang: Margins Under Pressure
🌎 Global Payments: The Synergy Payoff
📺 Fox: Subscriber Reversal
🪙 Circle: The Arc Windfall
🍞 Toast: Growth Meets Scrutiny
🧊 Dynatrace: Growth Delayed
🏈 Flutter: Costly Comeback
👑 DraftKings: Predictions Eat the Profits
🗞️ NYT: Subscribers Rebound
🧬 Tempus AI: The 2027 Unlock
📢 HubSpot: AI Conversion Gap
🎨 Figma: The AI Trade-Off
🛵 Grab: The Third Engine
🌊 DigitalOcean: The 60% Bet
🤖 Paycom: Automation Pays Off
🔥 Match: Tinder Turns Positive
👻 Snap: Profits Outrun Ads
⚡️ Celsius: Alani Takes the Lead
🏠 Zillow: The Housing Freeze
🦉 Duolingo: The Green Machine
🏴 Klaviyo: AI Starts Converting
🚲 Peloton: Profits Before Growth
🍿 AMC: Box Office Comeback
Apple’s Q4 revenue (September quarter) grew 12% Y/Y to $114.5 billion ($1.1 billion beat), while EPS rose 14% to $2.10 ($0.11 beat). Results included $0.05 per share in tariff refunds. But shares slipped after earnings following weaker margin guidance.
iPhone revenue grew 17% to $57.6 billion, exceeding expectations despite supply constraints. The new foldable iPhone Duo launched in October, so its early sales will contribute to Q1 FY27.
Mac revenue jumped 24% to $10.8 billion, well ahead of consensus.
Greater China grew 21% to $17.5 billion, ~$1 billion short of expectations.
Services reached a record $31.6 billion, but growth slowed from 12% in Q3 to just 10% Y/Y. Management expects another deceleration to 8%–9% in the December quarter, reflecting licensing, currency, and App Store headwinds.
The biggest problem is profitability. Gross margin fell to 48% (from 50% in Q3). Tariff refunds boosted both quarters, but the benefit shrank from two percentage points to one. Excluding refunds, gross margin declined roughly one percentage point, primarily due to rising memory costs. Management expects a further decline to 45%–46% in Q1 FY27, below the ~47% consensus.
Apple spent years keeping device prices relatively stable to expand its installed base and monetize customers through high-margin Services. Now memory inflation is forcing price increases across its product lineup, just as Services growth slows. Management says it's too early to assess the impact on demand.
New CEO John Ternus described memory pricing as unprecedented. Apple's manufacturing purchase commitments increased by $33 billion in one quarter to secure components, potentially shifting more inventory and demand-forecasting risk onto a company accustomed to extraordinary supply-chain flexibility. Advanced-chip supply constraints are easing, but memory shortages could continue restricting Mac and iPad production.
Meanwhile, Apple’s new Siri AI introduces additional infrastructure costs before meaningful monetization. Management confirmed plans to offer paid access to higher usage limits eventually, although pricing and adoption remain unclear.
Management expects holiday-quarter revenue growth of 7%–10%, above the ~6% consensus, supported by the new iPhone lineup.
Apple has emerged as a safe haven from the AI spending boom, briefly reclaiming its position as the world’s most valuable company at $5 trillion. But that perceived safety comes at a price. Shares trade at a historically elevated ~35x forward earnings. Apple has avoided the AI infrastructure spending race, but it cannot escape slowing growth and rising costs.
Shopify’s Q3 revenue grew 32% Y/Y to $3.7 billion (roughly in line), while adjusted EPS reached $0.49 ($0.03 beat). Shares initially plunged as Shopify failed to deliver its usual top-line beat.
Gross Merchandise Value (GMV) rose 29% Y/Y to $119.1 billion, slightly below the $120 billion consensus and down from 32% growth in Q2. International GMV grew 32%, offline GMV rose 30%, and B2B GMV surged 74%, underscoring Shopify’s expansion beyond traditional online retail.
Merchant Solutions revenue grew 35% to $2.91 billion, supported by Shopify Payments penetration exceeding 68% of GMV (+3pp Y/Y). Shop Pay GMV increased 50%.
Subscription Solutions grew 20% to $836 million, missing expectations. Monthly recurring revenue increased 19% to $230 million, reflecting continued merchant additions.
AI-driven traffic grew 2.6x Y/Y, while orders increased 3.3x. Shoppers arriving through AI channels converted 64% more often than through traditional search, while Shopify Catalog-powered searches converted at twice the rate of general AI searches. Management cautioned that AI commerce volumes remain small, but the early conversion advantages are encouraging.
Free cash flow jumped 61% to $816 million, reaching a 22% margin, up from 18% a year ago. However, CFO Jeff Hoffmeister attributed only about 1.5 percentage points of that improvement to structural operating leverage. The rest reflected temporary benefits from lower marketing spending, tax timing, and an accounting change related to merchant cash advances.
Shopify expects Q4 revenue to grow in the low 30s%, implying a seventh consecutive quarter above 30%. Gross profit should grow in the high 20s%, while free cash flow margin is expected to ease to approximately 19%, consistent with Q4 2025.
Shopify continues to deliver exceptional growth and cash generation, with AI opening another potential distribution channel. But GMV growth is moderating, and at roughly 65x forward earnings, even modest disappointments can trigger outsized reactions.
AppLovin’s Q3 revenue surged 55% Y/Y to $2.2 billion ($120 million beat), accelerating 14% sequentially. GAAP EPS reached $4.30 ($0.27 beat), while adjusted EBITDA jumped 59% to $1.8 billion, maintaining an extraordinary 84% adjusted margin.
The model timing issue we discussed in Q2 appears resolved. AppLovin partially rolled out its next-generation AI models, improving advertiser returns and unlocking additional spending. Its core gaming business reaccelerated to nearly 50% Y/Y growth, driving most of the revenue beat.
CEO Adam Foroughi described the architectural transition as comparable in technical significance to AXON 2.0. The new models can process more data and perform particularly well with newer and smaller advertisers, where historical conversion data is limited.
But the bigger opportunity may be beyond gaming.
2026-11-06 21:04:06
Welcome to the Free edition of How They Make Money.
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Democrats swept both chambers of Congress in the midterms, setting the stage for two years of divided government.
Wall Street initially cheered, with the S&P 500 rallying 1.6% on Wednesday. But the celebration was short-lived. Stocks reversed sharply on Thursday, with the Nasdaq plunging more than 5% as investors reassessed the AI infrastructure boom.
The AI data center buildout is becoming a political battleground. Of 41 local measures on Tuesday’s ballot, 40 went against data center development, amid concerns over electricity costs and environmental impacts. The backlash could make existing data centers more valuable while raising costs for future projects.
Today at a glance:
↗️ AMD: The 2027 Leap
🕵️ Palantir: Commercial Takes Over
🚖 Uber: Robotaxi Ramp
After months of research, our 64-stock Hidden Compounders Watchlist is ready.
Inside are 64 small companies that could compound for years.
Discover what they do in plain English, and why each made the list.
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AMD’s Q3 revenue jumped 45% Y/Y to $13.4 billion ($290 million beat), while adjusted EPS surged 74% to $2.09 ($0.15 beat). Operating margin jumped 7 points to 21%, showing strong operating leverage.
Data Center revenue nearly doubled to $8.5 billion (+97% Y/Y, +27% Q/Q), now representing 64% of total revenue, up from 58% in Q2. The segment’s operating margin expanded to 34%, up from 31% in Q2.
Both AI accelerators and server CPUs are driving the expansion. The Instinct MI450 series entered volume shipments, while cloud providers continued ramping EPYC deployments for agentic workloads. Meta, Microsoft, OpenAI, Anthropic, and Oracle are already running workloads on AMD’s first Helios rack-scale systems.
Outside Data Center:
Client revenue grew 7% to $2.9 billion, slowing sharply as rising memory prices pressured PC demand.
Gaming fell 40% to $773 million amid weaker console and graphics sales.
Embedded accelerated to 29% growth, reaching $1.1 billion.
The outlook was the big surprise. AMD guided Q4 revenue to $17 billion at the midpoint (roughly $0.8 billion above consensus), implying 66% Y/Y growth and a 27% sequential increase. Data Center alone should grow roughly 50% Q/Q, with AI accelerator revenue surpassing server CPU revenue for the first time.
Looking further ahead, Lisa Su now expects more than 80% revenue growth in 2027, with Data Center representing over 80% of the business. Server CPU revenue should double, while Data Center AI revenue is expected to grow even faster.
There are some trade-offs. Q4 gross margin is expected to ease from 56% to 55% as AI accelerators make up a larger share of the mix. Free cash flow fell to $554 million, from $1.6 billion in Q2, as inventory increased by $3 billion to support the infrastructure ramp.
AMD is delivering on the AI opportunity faster than anticipated, with Helios moving into production and EPYC benefiting from the explosion in agentic workloads. Now the 2027 outlook raises the stakes considerably.
Shares initially rallied following earnings, only to plunge more than 17% in Thursday’s broader AI-stock rout. The reversal highlights how quickly investor sentiment toward AI infrastructure can shift, even as AMD’s outlook remains unchanged.
Palantir’s Q3 revenue surged 96% Y/Y to $2.3 billion ($130 million beat), marking its 13th consecutive quarter of accelerating growth. Adjusted EPS reached $0.44 ($0.03 beat), while adjusted operating margin held at 62%. The Rule of 40 score climbed to an extraordinary 158%.
The biggest milestone was US commercial revenue surpassing government revenue for the first time:
💼 US Commercial: $984 million (+148% Y/Y, +29% Q/Q).
🪖 US Government: $953 million (+96% Y/Y, +18% Q/Q).
Total US revenue reached $1.94 billion (+119%), now accounting for 84% of Palantir’s business. Net dollar retention climbed eight points sequentially to 165%, showing existing customers are rapidly expanding spending.
However, the pipeline showed some cracks:
Total Contract Value (TCV) fell 13% Q/Q to $2.92 billion, with US commercial TCV dropping 31% to $1.46 billion. Its Y/Y growth slowed sharply from 153% in Q2 to just 11%.
US commercial Remaining Deal Value (RDV) reached $6.52 billion, up just 4% sequentially after growing 27% in Q2. Palantir also closed fewer deals above $10 million, declining from 73 to 64.
Management attributed part of the slowdown to shorter initial Sovereign AI contracts, including several eight-figure deals. CEO Alex Karp argued that customers are moving into production faster, with opportunities to expand contracts dramatically over time. That could explain the weaker bookings metrics, although investors will want to see those initial deals translate into larger, longer-term commitments.
Adjusted free cash flow remained strong at $1.2 billion, but its margin declined from 63% in Q2 to 53%.
Palantir raised FY26 revenue guidance by another $380 million to $8.53 billion, implying 91% annual growth. Q4 guidance of $2.65 billion exceeded consensus by ~$0.2 billion, although it implies sequential growth slowing to 15% (from 20% in Q3).
Palantir continues delivering extraordinary financial results. But at a valuation exceeding $400 billion (roughly 76x forward EBITDA), investors have little tolerance for slowing momentum. What to watch in Q4? Whether those smaller initial deals are turning into much larger contracts.
Uber’s Q3 revenue grew 10% Y/Y to $14.8 billion ($100 million beat), with UK accounting changes reducing reported growth by 8 percentage points. Adjusted EPS rose 35% to $0.88 ($0.01 beat).
Gross Bookings grew 20% to $59.8 billion, marking the fifth consecutive quarter of 20%+ growth, although slowing from 24% in Q2. Trips increased 16% to 4.1 billion, supported by 14% growth in monthly users.
🚗 Mobility bookings grew 17% constant currency to $29.5 billion, slowing from 20% in Q2. Driver shortages in Brazil, India, and Canada, compounded by higher fuel prices, constrained supply despite healthy demand. Management increased driver incentives and reported early improvements in October.
🛵 Delivery bookings grew 23% constant currency to $28.5 billion, nearly matching Mobility. Grocery and Retail reached a $15 billion annualized run rate (+40%), while Uber One membership expanded to 55 million.
Adjusted EBITDA rose 31% to $3.0 billion, with margin reaching 5.0% of Gross Bookings. Trailing free cash flow climbed to a record $10.4 billion.
The bigger story remains autonomous vehicles (AVs).
Uber expects approximately 700 fully driverless vehicles on its platform by year-end and more than 2,000 in 2027, ahead of a larger ramp in 2028.
Crucially, management says its US AV partners complete roughly 30% more trips per vehicle per day through Uber than first-party deployments nationwide. That’s early evidence that Uber’s demand aggregation and fleet operations could improve robotaxi economics.
But this strategy requires capital. Uber has outlined approximately $10 billion in conditional commitments to AV partners and fleets, while developing financing structures to attract third-party investors.
For Q4, management guided Gross Bookings to $63.25–65.25 billion (+18%–22% constant currency) and non-GAAP EPS to $0.95–0.99, slightly below consensus at the midpoint.
Uber’s core business continues generating substantial cash. The big test ahead is whether Uber can scale robotaxis profitably while preserving its marketplace economics as autonomous supply expands.
Stay tuned for tomorrow’s PRO issue with 50 companies visualized!
Apple, Shopify, AppLovin, MercadoLibre, and more.
That’s it for today!
Happy investing!
Disclosure: I am long AMD, PLTR, and UBER in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members.
Author’s Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization’s views.
2026-11-03 21:00:49
Welcome to the Premium edition of How They Make Money.
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Amazon CEO Andy Jassy believes AWS can become a $1 trillion annual revenue business within five to ten years.
That’s more than five times its current $184 billion run rate. AWS growth accelerated to 39% in Q3, backlog reached $578 billion, and Jassy now expects growth above 40% in both 2027 and 2028.
But the price tag is mind-boggling. Amazon’s trailing free cash flow plunged to negative $42 billion, while CapEx is expected to rise meaningfully above this year’s $220 billion in 2027.
Jassy remains undeterred:
“We can fund this plan. I think it will forever change the size of Amazon.”
The challenge is turning this unprecedented spending into lasting cash flow and attractive returns for shareholders.
Now let’s see what stood out this quarter.
Today at a glance:
Amazon Q3 FY26.
The AWS flywheel.
Key quotes from the call.
What to watch moving forward.
Revenue rose 12% Y/Y to $201.9 billion ($0.4 billion miss)
Gross margin was 53% (+2pp Y/Y).
Operating margin reached a record 14% (+4pp Y/Y).
AWS: 39% margin (+4pp Y/Y).
North America: 8% margin (+3pp Y/Y).
International: 4% margin (+1pp Y/Y).
Operating income surged 61% Y/Y to $28.1 billion. However, the prior-year quarter included $4.3 billion in FTC settlement and severance charges. Excluding these, operating income grew approximately 29%.
Net profit fell 2% Y/Y to $20.7 billion. The comparison was affected by a $9.5 billion non-operating gain from Anthropic in Q3 FY25.
Operating cash flow TTM rose 29% Y/Y to $168.3 billion.
Free cash flow TTM deteriorated to negative $42.4 billion, compared with negative $7.6 billion in Q2, as CapEx surged 82% Y/Y to $210.7 billion TTM.
Cash, cash equivalents, and marketable securities: $114 billion.
Long-term debt: $173 billion, up from $129 billion in Q2.
Revenue growth of 12% to 16% Y/Y.
Operating income of approximately $31 billion, or +24% Y/Y at the midpoint.
☁️ AWS accelerates again: Revenue grew 39% Y/Y to $46.0 billion, accelerating for the sixth consecutive quarter. Operating income surged 55% to $17.8 billion. Backlog climbed to $578 billion, up from $496 billion in Q2. AWS added $3.8 billion in sequential revenue despite capacity constraints, and management says core compute and storage are growing at their fastest rates in years.
💵 The AI bill keeps growing: Amazon spent $75.9 billion in cash CapEx in Q3 alone, compared with $42.4 billion in operating cash flow, resulting in approximately $33.5 billion in negative quarterly free cash flow. The company maintained its $220 billion CapEx forecast for 2026, but Jassy expects to spend meaningfully more in 2027. Amazon’s investments are accelerating faster than its ability to generate cash internally.
📦 Retail margins improved, with a caveat: North America revenue grew 6%, International grew 5%, and worldwide paid units increased 12%. Reported growth was distorted by Prime Day moving into Q2, reducing companywide revenue growth by approximately four percentage points. Excluding last year's $2.5 billion FTC settlement charge, North America margin expansion was less than one percentage point. Meanwhile, shipping costs grew 11%, slightly below unit growth despite higher fuel expenses.
📢 Advertising hits a speed bump: Revenue grew just 12% Y/Y in constant currency (11% reported) to $19.6 billion, down sharply from 26% growth in Q2. The Prime Day shift explains roughly 8.5 percentage points of the slowdown from Q2 to Q3, with NBA scheduling and tougher comparisons also contributing. Management expects growth to recover to the high teens in Q4, suggesting the slowdown may be largely temporary.
🔮 Guidance is slightly softer than expected: Q4 revenue guidance implies $243.5 billion at the midpoint, roughly $1 billion below consensus. Operating income is expected to grow 24% Y/Y to $31 billion, although Amazon Leo will remain a drag as certain production and launch costs won’t begin to be capitalized until Q1 2027. The outlook suggests continued operating profit growth despite the enormous infrastructure buildout.
2026-11-01 23:03:11
Welcome to the Premium edition of How They Make Money.
🔥 The October report is here!
All the key earnings visuals from the past month in one place.
✔️ Cut through the noise with clear, concise financial snapshots.
✔️ See revenue trends, profit margins, and key takeaways instantly.
Download the full report below or log in to your account.
![Screen Recording 2026-10-30 at 1.57.42 PM.mov [video-to-gif output image]](https://substackcdn.com/image/fetch/%24s_!8SQF!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F485df748-11dd-4492-8f7a-d7ce3b5494c1_800x449.gif "Screen Recording 2026-10-30 at 1.57.42 PM.mov [video-to-gif output image]")
Inside the October report:
🚀 IPO Deep Dives: Anthropic, SpaceX.
☁️ Mega-Caps: Alphabet, Microsoft, Amazon, Meta, Tesla.
🧩 Chips: TSMC, ASML, Samsung, SK hynix, Intel, KLA, Lam, Sandisk.
💊 Healthcare: Lilly, J&J, UNH, Abbott, AbbVie, AstraZeneca.
💳 Fintech: Amex, Visa, Mastercard, PayPal, Robinhood, SoFi.
💰 Wall Street: Morgan Stanley, Goldman Sachs, BlackRock.
🏦 Banks: JPMorgan, BofA, Wells Fargo, Citigroup, Schwab.
💻 Software: IBM, SAP, ServiceNow, Fortinet, AppFolio.
✈️ Travel: American, Delta, Southwest, United, Hilton.
🍿 Entertainment: Netflix, Comcast, Spotify, Roblox.
🛡️ Aerospace: Boeing, Airbus, Lockheed Martin.
☕ Restaurants: Starbucks, Chipotle, Domino’s.
📡 Telecom: AT&T, T-Mobile, Verizon.
🚗 Autos: Rivian, GM, Ford, Stellantis.
Plus Nike, Accenture, Reddit, Pinterest, Etsy, Coca-Cola, PepsiCo, Mondelez, Hershey, UPS, P&G, GE Vernova, Tilray, Intuitive, and more.
2026-10-31 22:02:33
Welcome to the Saturday PRO edition of How They Make Money.
Over 300,000 subscribers turn to us for business and investment insights.
In case you missed it:
📊 Monthly reports: 200+ companies visualized.
📩 Tuesday articles: Exclusive deep dives and insights.
📚 Access to our archive: Hundreds of business breakdowns.
📩 Saturday PRO reports: Timely insights on the latest earnings.
One notable omission from today’s roundup is Amazon. Its Q3 results deserve a standalone deep dive, so we’re saving that analysis for Tuesday’s issue.
Today at a glance:
💻 Microsoft: Azure Breaks Away
💊 Eli Lilly: Volume Machine
📱 Samsung: Sold Out Through 2027
🧠 SK hynix: Sold Out Through 2029
💳 Visa: Cost of Growth
💳 Mastercard: Services Take the Lead
🏭 Intel: AI Can’t Save PCs
🥤 Coca-Cola: Global Divide
🦠 Merck: Keytruda Bridge
🧬 AstraZeneca: Funding the Pipeline
⚡ GE Vernova: Pricing Power Arrives
🔬 KLA: $200 Billion Market
📡 Verizon: Subscriber Turnaround
💾 Sandisk: AI Storage Supercycle
🧑💻 ServiceNow: The AI Paradox
📶 T-Mobile US: Pricing Over Growth
🛩️ Boeing: Recovery Delayed
🛩️ Airbus: Q4 Crunch
🔒 Fortinet: Service Gap
☕️ Starbucks: Turnaround Holds
💡 Cadence: Agentic Moat
📦 UPS: Margin Test
🪶 Robinhood: Prediction Engine
🍪 Mondelez: Volume Takes Over
🍫 Hershey: Volume Problem
🏨 Hilton: AI Lodging Boom
📦 FedEx: Network Payoff
💳 PayPal: Standalone Test
📈 Coinbase: Diversification Takes Hold
👾 Roblox: Retention Payoff
🌯 Chipotle: Traffic Holds Up
👽 Reddit: The Google Problem
🏦 SoFi: Profit Inflection
⚡ Rivian: R2 Takes Over
📌 Pinterest: Advertiser Problem
📦 Etsy: Buyers Are Back
🦷 Align: A New Chapter
🩺 Teladoc: Insurance Gap
Microsoft’s Q1 FY27 revenue (September quarter) rose 19% Y/Y to $92.3 billion ($1.5 billion beat), while adjusted EPS grew 18% to $4.89 ($0.17 beat).
Azure revenue accelerated to 48% growth, from 43% in Q4, comfortably exceeding expectations. Shares jumped as strong cloud demand and better-than-expected cash generation eased concerns about AI spending.
Microsoft also introduced a new reporting structure, combining its cloud and enterprise software businesses into two main segments:
Agents and Infra, which grew 25% to $76.8 billion.
Devices and Consumer declined 3% to $15.5 billion.
Microsoft revamped its reporting segments just two years ago, so another reshuffle feels like overkill. The visual below breaks down revenue by product and service instead, which I find more comprehensive and insightful.
The AI investment cycle is beginning to show tangible returns:
Azure reached $33.2 billion in revenue, with growth expected to accelerate further to 49%–50% in Q2. Demand continues to exceed available capacity.
OpenAI-related commercial revenue reached $10 billion, representing roughly 11% of Microsoft’s total revenue, up from about 7% in FY26. This strengthens AI monetization but also highlights customer concentration.
Microsoft 365 commercial cloud grew 18%, adding another AI monetization source through Copilot. Meanwhile, customers using consumption-based Copilot billing grew more than 75%.
Cash CapEx more than doubled to $39.4 billion, while total capital spending, including leases, reached $45.2 billion. Operating cash flow grew 29% to $58 billion. As a result, free cash flow fell 27% to $18.6 billion. Microsoft expects CapEx to exceed $50 billion next quarter and accelerate further in early calendar 2027.
Commercial RPO remained enormous at $677 billion, up 73% Y/Y but roughly flat sequentially. That backlog provides visibility, though OpenAI likely still accounts for a substantial portion.
Microsoft is showing that AI infrastructure spending can drive accelerating revenue and strong profitability at the same time. The challenge is sustaining those returns as spending rises further, particularly if demand from OpenAI or other large AI customers becomes less predictable.
Eli Lilly’s Q3 revenue surged 39% Y/Y to $24.4 billion ($1.8 billion beat), while adjusted EPS grew 7% to $7.48 ($0.87 beat). Volume increased 53%, more than offsetting a 15% decline in realized prices. Shares jumped more than 6% as Lilly raised its annual revenue outlook by an impressive $5.5 billion.
Mounjaro and Zepbound generated a combined $16.1 billion, representing 66% of total revenue:
Mounjaro grew 65% to $10.7 billion, with international sales surging 93% to $5.7 billion despite lower prices, particularly in China.
Zepbound grew 49% to $5.35 billion, benefiting from expanded US insurance coverage. More than 500,000 patients have enrolled in the new Medicare GLP-1 Bridge program, with roughly 70% starting on a Lilly medicine.
Foundayo reached $184 million, up from $98 million in Q2 but below the ~$231 million consensus. Lilly’s oral obesity pill is struggling to match the early adoption of Novo Nordisk’s Wegovy pill.
The quarter also benefited from $900 million in favorable adjustments and milestone payments, including $410 million from Jardiance that will not recur. Meanwhile, retatrutide delivered positive head-to-head Phase 3 results against Ozempic, strengthening Lilly’s next-generation obesity pipeline ahead of a planned Q1 2027 FDA filing.
Lilly raised FY26 revenue guidance to $91–92 billion (from $85–87 billion), while underlying EPS expectations increased by $4.07 at the midpoint. However, $4.57 in acquired R&D charges more than offset that improvement, leaving reported adjusted EPS guidance slightly lower at $35.00–36.00.
Lilly’s GLP-1 franchise continues to grow despite falling prices, with expanding coverage creating a larger addressable market. The challenge is sustaining extraordinary volume growth while building a second generation of treatments that can defend its market leadership.
Samsung’s Q3 revenue surged 127% Y/Y to a record ₩195.3 trillion (~$146 billion), while operating profit climbed nearly ninefold to ₩107.4 trillion (~$80 billion), another record. Operating margin reached an extraordinary 55%, up from 52% in Q2. Yet shares fell more than 4% as earnings missed elevated expectations and investors questioned how much of the AI windfall would reach shareholders.
The divergence between Samsung’s businesses is becoming extreme:
Semiconductor revenue rose 15% Q/Q to ₩147.1 trillion, while operating profit climbed to ₩106.5 trillion. The chip division now accounts for 99% of Samsung’s total operating profit.
HBM4 sales more than tripled Q/Q, as Samsung gains ground in next-generation AI memory. Management says 2027 capacity is already fully booked, with supply shortages expected to persist through 2028.
The consumer electronics business lost ₩0.8 trillion as soaring memory prices squeezed profitability in smartphones, TVs, and appliances. The same shortage fueling record semiconductor profits is hurting Samsung’s other businesses.